The release of a study titled “Digital Assets Primer: Only the First Inning” by Bank of America (BofA) marked the beginning of the company’s digital asset research. Bitcoin and other cryptocurrencies are “too big to ignore,” according to experts at Bank of America. “In our opinion, there may be more potential than the doubters believe there is.” However, by being distracted by the novelty of altcoins, Bank of America strategists may wind up losing sight of what will revolutionize banking and money – Bitcoin. Before we dive into our article, register yourself on Bitcoin Evolution App, and learn everything about the latest Chinese cryptocurrency.
In its investigation of the complexities of the “new asset class,” the research group, headed by strategist Alkesh Shah, found that most of the study had a myopic view on bitcoin. “In our opinion, there may be more potential than the doubters believe there is.” The study acknowledges the significance of Bitcoin but asserts that large institutional investors have invested $17 billion (approximately Rs. 1,27,055 crores) into the Decentralised Finance (Defi) ecosystem. And to offer an independent and decentralized alternative for financial services generally controlled by banks and domestic or foreign administration, Defi systems seek to provide an autonomously and decentralized option for finance.
The Bank of America has focused on forecasting how blockchain technology uses in various applications would alter and power numerous sectors shortly. As a result, blockchain eliminates the need for a centralized authority to monitor financial transactions, allowing individuals to have complete control over their assets and trades. On the other hand, the study cautioned NFT investors to thoroughly research the financial risks of investing in highly valued NFT components before proceeding.
Despite all of the controversy surrounding Bitcoin and cryptocurrencies, the study indicates that Wall Street is becoming more enthusiastic about them, as reported by Bloomberg. According to Bloomberg, BofA also addressed the role that regulation should play in the asset class, saying that “more regulation may be a benefit for crypto in the long term.” It will be less difficult to invest in cryptocurrencies once regulations are created, according to the report.
Like many conventional analysts and economists, the Bank of America failed to see the distinction between Bitcoin and “crypto,” basing their conclusions on erroneous assumptions and a general lack of comprehension. When Bank of America strategists believe that “crypto” has genuine value propositions, they are missing the point – when, in fact, all other “altcoins” do not need a token or a blockchain in the first place.
In addition, and probably most crucially, Bank of America fails to understand that, although “crypto” supposedly aims at “improving” the previously established financial system, Bitcoin is here to render everything obsolete. Because the peer-to-peer network wants to replace the whole system — including Bank of America — it makes sense to concentrate their efforts on areas that do not endanger their business model.
Nayib Bukele, the President of the Central American country of El Salvador, shared screenshots of a Bank of America economic viewpoint report on Twitter the day before yesterday (BofA). Additionally, in addition to outlining reasons why the bank is optimistic about the prospects for El Salvador’s economy, this study outlines what possibilities Bitcoin acceptance as a legal currency may offer the nation in the future. As estimated by the Bank of International Settlements, the average cost of sending money abroad is more than 10%, which bitcoin may help to decrease significantly.
As Bank of America points out, “using bitcoin for remittances may decrease transaction costs when compared to conventional transfer methods.” Recipients may receive the Salvadoran diaspora’s remittances in more enormous proportions if the use of Bitcoin reduces transaction costs. It would increase recipients’ discretionary income while decreasing the percentage of remittances lost to financial intermediaries.
In addition, the study said that Bitcoin might have a beneficial impact on Salvadorans by allowing them to bank the unbanked. Additionally, according to Bank of America, by declaring Bitcoin legal currency in the nation, El Salvador provides additional options to its citizens, including consumers and merchants, who may now pick whatever monetary standard they want to trade and save under in the country.
“The adoption of bitcoin may potentially result in an increase in [foreign direct investment] flows into El Salvador,” according to the study. According to the report, foreign direct investment (FDI) may come from Strike (creator of the payments network), Bitcoin miners, ATM makers, and other businesses. Bukele extended an invitation to bitcoin miners to use El Salvador’s plentiful geothermal energy shortly after declaring that his nation will adopt Bitcoin as its official currency. Volcanoes across the country fuel this clean, emissions-free energy source. Then Bukele said he was “getting started designing a whole Bitcoin mining centre around it.”
Another kind of foreign direct investment (FDI) that El Salvador has previously received is bitcoin ATMs. According to reports, Athena Bitcoin began deploying 1,500 bitcoin ATMs across the nation in June.